ASX System Error Forces Chi-X to Delay Start of Auction Product

Chi-X Australia Pty, which had
planned to offer investors a way of trading the equity market
closing auction starting today, postponed the product after a
system error at ASX Ltd. (ASX)

Chi-X Australia, the nation’s only competitor exchange to
ASX, was set to offer its “market on close” product, which
matches orders with bids at the closing price for each security.
This would allow Chi-X Australia users to participate for the
first time in the auction held on the ASX at the end of each
trading day. A computer software error at ASX over the weekend
prompted the Australian Securities and Investments Commission to
postpone the start, said John Fildes, chief executive officer of
Chi-X Australia.

“It’s a complete disaster,” Fildes said in a telephone
interview today in Sydney. “ASIC asked everyone involved in
this to delay. I will be meeting with ASIC this afternoon about
it, but we don’t want to make a fuss, we’d rather get on with
resolving this.”

The product for trading the closing auction through Chi-X
Australia, known as MOC, was supposed to begin today for all
S&P/ASX 200 Index (AS51) companies, with no minimum order size. Traders
would enter MOC orders from the market open at 10 a.m. in Sydney
through to 4:20 p.m., when MOC trading will stop.

Software Issue

“ASX’s monitoring detected a potential issue with some
third-party provided software that, along with other
enhancements to ASX Trade, was due to be implemented last
weekend,” Matthew Gibbs, a spokesman for ASX, said in an e-mail. “To prevent any disruption to normal market operation, we
made the decision to postpone until a fix could be put in place.
We were not prepared to put the Australian market at risk. We
will now work with ASIC, Chi-X and clients to plan for a new
implementation date.”

Daniel Wright, a Sydney-based spokesman for ASIC, didn’t
immediately return a voicemail message left on his phone seeking
comment from Bloomberg News. Chi-X Australia’s Fildes said he
has spoken with Peter Hiom, ASX’s deputy chief executive
officer, to express concern about the delay.

Chi-X Australia captured 16 percent of Australian equity
trading by market value in the week through Nov. 22, with ASX
taking the rest, according to ASX data.